Legalpedia Citation: (2023-06) Legalpedia 24036 (CA)

In the Court of Appeal

Holden at Lagos

Fri Jun 9, 2023

Suit Number: CA/L/234/2015

CORAM

OBANDE FESTUS OGBUINYA JUSTICE, COURT OF APPEAL

ABUBAKAR SADIQ UMAR JUSTICE, COURT OF APPEAL

ABDULLAHI MAHMUD BAYERO JUSTICE, COURT OF APPEAL

PARTIES

RIOL CASSAVA PROCESSING INDUSTRIES SERVICES CO. LTD., APPELLANT

 

APPELLANTS

1. DESSCO DEPENDABLE ENGINEERING SERVICES CO., LTD.,
2. ENGNR R.O. APARA
3. BANK OF INDUSTRY LIMITED    RESPONDENTS

 

RESPONDENTS

AREA(S) OF LAW

: APPEAL, COMPANY, CONTRACT, CRIMINAL LAW AND PROCEDURE, EVIDENCE, PRACTICE AND PROCEDURE, TORT

SUMMARY OF FACTS

The Appellant’s (Claimant at trial court) claim is that the contract with the 3^rdRespondent was for the 3^rd Respondent to provide a total loan facility of the sum of N6, 532, 500 (Six Million, Five hundred and thirty two, five hundred Naira) out of which the 3^rdRespondent was to disburse only 70% of the contract sum to the 1^stRespondent but that the 3^rdRespondent disbursed the entire N6, 532, 500 to the 1^st Respondent in breach of the terms of the contract without justification or consent of the Appellant.

The distribution transformer was purchased, installed and connected but could not sustain high tension power. The transformer was therefore returned to the supplier for repair with the view to reinstall afterwards, it seemed it was at the point of determining who will bear the cost of repair that the dispute escalated. The Appellant refused to bear the cost and the 1^stRespondent also refused until the intervention of the 3^rdRespondent. The 3^rd Respondent upon intervening found that the Appellant had demanded a kick-back of N1, 245,000 from the 1^st Respondent.

At trial, there was a claim and a counter-claim. Judgment was delivered wherein the lower Court struck out the 2^nd Respondent as a party and dismissed the claims of the Appellant. The lower Court also award the cost of N100, 000 against the Appellant in favour of the 3^rd Respondent.

Aggrieved by the decision, the Appellant made the instant appeal.

 

HELD

Appeal dismissed

ISSUES

Ø Whether the lower Court was right when it held that the Appellant frustrated the performance of the contract among the parties and absolved the Respondents of the breach of same?

Ø Whether the learned trial Judge was right in striking out the 2nd Defendant as a party to the suit as presently constituted?

RATIONES DECIDENDI

FINDING OF A TRIAL COURT – WHEN THE FINDING OF A TRIAL COURT IS SUPPORTED BY CREDIBLE EVIDENCE

I am of the strong view that the above finding is supported by credible evidence and this Court will not interfere or disturb it. See Oyovbiare & Ors vs. Omamurhomu (1999) LPELR-2887(SC); Saliba vs. Yassin (2002) 4 NWLR (Pt. 756) P.1. – Per A.S. Umar, JCA

PARTIES – WHERE PARTIES TO A SUIT ARE EQUALLY IN THE WRONG

The Appellant will not be allowed to benefit from its own wrong. It is trite that where parties are equal in the wrong, the Court will not give one, legal redress, against the other. See Eperokun & Ors vs. UNILAG (1986) 4 NWLR (Pt. 34) p. 162. – Per A.S. Umar, JCA

BREACH – FOR A BREACH TO ARISE

Furthermore and from the totality of evidence, the Appellant has not shown how the disbursement of the entire contract sum to the 1 st Respondent has led to a breach of or the frustration of the contract. For a breach to arise, the failure of party to perform his obligations must have caused damages to the other party or parties. See Odulate vs. First Bank (2019) LPELR-47353(CA). – Per A.S. Umar, JCA

INCORPORATED COMPANY – AN INCORPORATED COMPANY ENJOYS SEPARATE PERSONALITY – EFFECTS OF LEGAL PERSONALITY

The law is trite that corporate entities enjoy a separate personality from their promoters and directors.

In New Res. Int Ltd vs. Oranusi (2011) 2 NWLR (Pt 1230) 102 at 24 – 125, the Court held as follows:

“Once a Company is incorporated under the Relevant Laws, it becomes a Separate Person from the Individuals who are its Members. It has capacity to enjoy legal rights and is subjected to legal duties, which do not coincide with that of its Members. Such a Company is said to have Legal Personality and is always referred to as an Artificial Person. Consequently, it can sue and be sued in its own name. It may own Property in its own right, and its Assets, Liabilities, Rights and Obligations are distinct from that of its Members” In Marina Nominees Limited vs. Federal Board of Inland Revenue (1986) SC ELC 1386 at 1, the effect of the legal personality of a Limited Liability Company was held by the Supreme Court per Kazeem, JSC as follows:

“When the Memorandum is duly signed and registered…the Subscribers are a Body Corporate “capable forthwith” to use the words of the Enactment, “of exercising all the functions of an Incorporated Company”. Those are strong words. The Company attains maturity on its birth. There is no period of minority-no interval of incapacity. I cannot understand how a body corporate thus made capable by statute, can lose its individuality by issuing the bulk of its Capital to one person, whether he be a Subscriber to the Memorandum or not. The Company is at Law a different person altogether from the Subscribers to the Memorandum; and, though it may be that after incorporation, the business is precisely the same as it was before, and the same persons are Managers, and the same hands receive profits, the Company is not in Law, the Agent of the Subscribers or Trustees for them. Nor are the Subscribers as Members liable, in any shape or form, except to the extent and in the manner provided by the Act. That is, I think, the declared intention of the enactment. ” His Lordship went on to hold that:

“It seems to me impossible to dispute that once the Company is legally incorporated, it must be treated like any other independent person with its rights and liabilities appropriate to itself, and that the motives of those who took part in the promotion of the Company are absolutely irrelevant in discussing what those rights and liabilities are.”…. See the case of Salomon v Salomon & Co (1897) AC 2 KB AT 492 AT 503. Also, in Bureau of Public Enterprises & Anor v BFI Group Corporation(2022)LPELR-56791 (CA), the Court distinguished the Personalities of Individuals that make up a Company, from the Company, by stating thus: – "

The Concept of Corporate Personality established since the decision in the Celebrated Case of Salomon Vs. Salomon and Company Ltd (1897) AC 22, has its foundation written in stone, on the belief that once a Company is incorporated, it becomes a Separate Person from the individuals who are its Members, with capacity to enjoy legal rights and duties distinct from its Members. It may own Property in its own Right and its Assets, Liabilities, Rights and Obligations are distinct from that of its Members”. – Per A.S. Umar, JCA

LIABILITY – WHEN DIRECTOR, SHAREHOLDER, OR AN OFFICER OF THE COMPANY BEARS LIABILITY

It is trite once a company is incorporated, it becomes an entity of its own and it is inconsequential whether a natural person is the Chief Executive Officer or alter ego of the company. See the case of Okomu Oil Palm Company Ltd vs. Iserhienrhien (2001) 6NWLR (Part 710) 660; Konkon Conglomerate Ltd. vs. NIPCO (2021) LPELR-52828(CA) Therefore, if the 1 st Respondent incurs any liability whatsoever from a breach of contract, the fact that the 2 nd Respondent is a Director or a shareholder or a Chief Executive Officer in the 1 st Respondent does not automatically mean he would be jointly liable with the 1 st Respondent. The Appellant have to show the steps, overt acts taken by the 2 nd Respondent in his personal capacity to breach the contract or to perpetrate fraud, it is until then that the veil of incorporation can be lifted and the erring director or shareholder will be exposed to bear the liability or culpability of his wrongful act. – Per A.S. Umar, JCA

CASES CITED

STATUTES REFERRED TO

1. Evidence Act, 2011

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